Benefit Cost Comparisons between State and Local Governments and Private Sector Employers

Abstract

In June of 2005, overall total compensation costs were 46 percent higher among state and local government employers ($35.46 per hour worked) than among private-sector employers ($24.24 per hour worked) (calculated from Figure 1). Total compensation costs consist of two major categories: wages and salaries and employee benefits. For both of these categories, state and local government employers' costs were higher than those of private-sector employers: 40 percent higher for wages and salaries and 61 percent higher for employee benefits (calculated from Figure 3). This article examines some of the causes of the differences in total compensation costs between state and local government employers and private-sector employers. The datasets used are as follows: For compensation costs, the Bureau of Labor Statistics (BLS) Employer Costs for Employee Compensation: June 2005; for private-sector benefit participation, the BLS's National Compensation Survey, Employee Benefits in Private Industry in the United States, March 2005; and for state and local government employers, BLS' Employee Benefits in State and Local Governments, 1998. Employment by industry group data come from BLS' Employment and Earnings, August 2005, and employment by occupation data are from EBRI tabulations of the Current Population Survey, March 2005 Supplement by the U.S. Census Bureau.